How I became a home owner

Crazy, but true. We have been in UK for four months, but we would be proud home owners - first ever - as of tomorrow. It's been one adventure after another. Let me outline the whole story.

We have been staying in wife's employer provided guest house ("serviced apartment") all this while. Our plan was to rent a flat for 6 months to a year, see how we like the country and may be buy a home in some suitable place after doing a lot of research. We can stay in the guest house for three months. So we started our rental search in the beginning of August. We saw a couple of rentals in Basingstoke, which turned out to be ok. Kind of small by US standards, but definitely ok for UK. For a 2 BR flat, we would be paying close to £900 a month.

One Saturday, we visited a friend who bought a house in Basingstoke last year. It was a new construction in a small community, close to the station, built by David Wilson Homes. He happened to mention that houses were still on sale and suggested we take a look at a show home. We saw a 3BR midterrace (US townhouse) with three floors, a garden and a garage which will be available in end of September. Wife was very interested, I was excited at the prospect. The kitchen was small and the house was in three floors, but apart from that, we liked it.

We came home and did some calculation. The price of the house was £225,000 (after a little bit of negotiation). The mortgage rates were being quoted anywhere between 2.5% and 3.0% (variable rates only - UK does not have lifetime fixed rate). If we put down a good deposit and took a mortgage for 25 years, our monthly payments would be less than the rent - for a bigger house with a garden and garage. Unlike US, you don't pay property taxes - you just pay council tax of about £100-£150 a month, irrespective of whether you rent or own. The only extra cost with owning is taking building insurance, which should be less than £200 a year. This was close to the station (10 minute walk) and a new construction. The latter was a big selling point, since even tightening a loose screw is beyond me sometimes.

We debated the question of whether it is too soon to buy a house. If we ended up staying here for at least three years, we would at least break even. The terrifying prospect of being stuck in one place also crossed our minds. Well you have to make up your mind sometimes. So we put down a deposit of £250 which will hold the house for us for one month, by which time we should finalize all the details. Life is good.

After the initial euphoria subsided, reality hit us. Like getting a mortgage for example. UK is much like US - driven by credit history for all kinds of loans. We had trouble getting a mobile phone contract initially, so getting a mortgage is not going to be trivial. I started with HSBC, where we had a bank account and credit card. It sounded promising, but went nowhere since they required us to be HSBC customers for at least a year before they would give us mortgage. That's a pity because they were offering the best mortgage rate. Many other banks required us to be in UK for at least 6 months or a year before they would consider us, since we would fail their credit check.

After doing a little bit of research, we found out that Halifax is an option for us. They do not require a minimum time in UK and their rates were good. So I called their mortgage department and gave all the details. I was told we passed their internal credit check and would be eligible to apply. That was some good news, but till we got a mortgage offer, which could take 3-4 weeks, anything can happen. So we decided to take it easy, not talk about the house and just let it go.

We got an offer two weeks ago. We signed the contract through a solicitor 2-3 days later. We would be getting the keys to the house tomorrow (Sep 24). Things have worked out very well!

Halifax required us to open a current account (US - checking account) which would reduce the mortgage rate by 0.3%. That sounded like a small effort, so I went ahead and applied after getting the offer. Imagine my surprise when they rejected the application because of not enough credit score! Apparently we can be trusted with a mortgage, but not with a bank overdraft. Crazy indeed - you never know what to expect in this strange island.